Why Companies are Ditching Lean Programs for Strategy Execution

This article is a section from the upcoming book by Calvin L Williams titled F.I.T. – Agile Strategy Execution for Unstoppable Growth

After the titanic had grazed the iceberg that had essentially sealed its fate, it’s said that the cleaning crew continued to wash dishes, prepare beds, and polish doorknobs. Clearly, they understood that conditions on the ship had changed but they proceeded as if all was in order. There was no longer demand for clean doorknobs, but the supply kept coming. The cleaners did not miss a beat, even working to further perfect their craft as passengers scrambled about chaotically, seeking the first opportunity to safely depart from the sinking vessel. Surely the cleaners’ time and talent could have been put to better use in this moment of desperation. Perhaps their hands could have helped to save lives by crafting lifeboats. Maybe their minds could have come up with ideas to isolate the breech in the hull of the ship and keep it afloat. Instead, they had remained disciplined to orders that had quickly become irrelevant. They continued to improve in a direction that produced no value for the people they served. Everything they did from that moment on was 100% waste. This is the danger of random improvement. It is also the reason why the real Lean Manager must be the CEO, whose very job it is to steer the ship toward prosperity and away from treacherous waters.

Much random improvement is committed in the name of Continuous Improvement. I once worked for a leading consumer goods manufacturing company that had engaged in an aggressive campaign to implement a program called Total Productive Maintenance (TPM) across its global manufacturing network about 14 years before I was hired. This was their approach to Continuous Improvement. TPM is a workforce and equipment maintenance program developed by Toyota and has been adopted by hundreds of manufacturing companies around the world. It consists of 8 pillars with various tools, metrics, defined roles, and tons of other resources for implementation. It is a very regimented system and requires a great deal of discipline to follow. TPM can be a wonderful program if applied well. Plants running TPM programs are very orderly and can produce high efficiencies if strictly adhered to.

When the program was first rolled out at the company I had joined, the original leaders took a very hostile approach to gaining traction. They decided that those who resisted would be terminated from the company. The tagline they used was “we will bury the dissenters and carry the wounded.” The mission of this department was “zero losses,” meaning there was no tolerance for production losses, as measured by OEE, or overall equipment effectiveness. As you can imagine, this approach had a very destructive impact on the otherwise healthy company culture. It encouraged people to create the appearance of compliance without actually improving, even hiding losses so they could show higher OEE scores.

Fast forward, I came along after the program had been running for 14 years. It was in decline across the network, and I was tasked with turning things around. The approach to gaining adoption had softened quite a bit by then and we were trying to create pull for TPM training and workshop services with a focus on business results. As you could imagine, there was still some reluctance to get “help” across the network. In my effort to build a case for the program, I researched the business performance trajectory across plants in their respective markets and correlated it to TPM progression. What I found was startling. It turned out that the plants that had made the most TPM progress were also doing the worst in key business metrics such as profitability, market share, and growth. There seemed to be a negative correlation between success with TPM and success in business overall for this sample set. Some of the top-rated TPM plants were outright failing in their markets. Perhaps there were many reasons to explain this beyond what I could see. When I asked my manager to help me understand the data, he suggested that I ignore it and look elsewhere. I quickly realized that I was being asked to keep quiet and polish the doorknobs on the titanic, all in the name of Continuous Improvement; and worse, I was expected to go out and convince everyone else to join me. This, to me, conflicted with my professional integrity. Instead, I focused on strategy deployment and execution, helping the plants to increase alignment with what was most important to improve in order to growth their business. Then I provided help as appropriate to close gaps in alignment with the market. This included leading a very successful campaign of enterprise Change Management and several other initiatives. This approach contributed to a 12% increase in EBITDA for the business in just over a year. It also aided in the turnaround of two key plants that were failing in their markets.

There is a growing mistrust for executive leaders within the Lean and Continuous Improvement community, largely due to conflicting agendas. Many of the practitioners believe that every company needs to follow Toyota and other leading companies with blind obedience. Toyota’s production system, or TPS, is founded on Continuous Improvement and Respect for People. Continuous Improvement practitioners have taken this to mean that the people on the frontlines know exactly what needs to be improved and their leaders, executives, have no idea. These practitioners are showing a form of disrespect for people as well, considering that executive leaders are people too. It is the role of the CEO to increase the company’s value in the market and improve its relationship with customers. It is her job to lead the company to higher ground. CEOs are constantly reading the market and should have the clearest insights to determine the best way forward. It’s her job to create the company’s strategy and ensure that it gets executed. In other words, she is consumed with improving the overall company’s performance. However, the Lean Manager is often seeking to make isolated improvements to justify their own job in the company. This is generally true for all employees. The Lean Manager is also obsessed with performance, but has a limited market perspective, and thus cannot tell which way is up for the company. This can create misalignment in agendas. The CEO speaks the language of Strategy Execution in order to maximize the company’s value. The Lean Manager speaks the language of Continuous Improvement and trying to follow Toyota. Could it be that they are both speaking a similar language but not understanding each other? There is a trend in industry where companies are phasing out Lean Programs and building Strategy Execution functions. Companies are realizing that becoming Lean, or even better, becoming FIT, is a function of executing their own strategies, not Toyota’s. Being adaptive to a constantly changing market continuously improves company value and fosters a Continuous Improvement culture, while driving strict compliance to other companies’ agenda does not. It’s better to work for a company that is winning in its market than for one that is winning in Lean and going out of business.

Time and talent are finite resources. People obviously need to execute their day jobs with excellence. The limited amount of time left over at the end of the day can be used to improve the way work gets done. Random improvement is the act of changing anything one can see around them that they don’t like. However, everyone in the company is there because a customer somewhere values something they do, and that customers’ needs are constantly moving target. Its most advantageous to apply these limited resources directly at the things that will help them outperform competitors and win customers over. Soliciting directionless ideas from employees and having a committee select what will get implemented is futile. Implementation time and resources are finite. As soon as you tell a person that their idea won’t be selected (or just ignore them), they will disengage from the process. If a person wants something done, they’re not going to use the suggestion box or idea submission software, they’re going to walk into the office and lobby the person(s) who can help make it happen. Defining success in Continuous Improvement by cost savings can also be problematic as cutting out costs then spirals into cutting out the company’s ability to function effectively. It leads to weaking the business. Improvement means acting in the best interest of the customer and other key stakeholders. When people start putting their own agenda ahead of the customer’s, they start down the path of the titanic. They forget why they are there to begin with. They forget that the resources they demand in exchange for their work are the product of someone else’s hard work. They forget that they are sitting in the shade today because someone else planted a tree long before them. The titanic was held up as an indestructible ship. Edward Jones Smith, one of the ship’s investors, said that “not even God could sink the Titanic.” It carried with it a sense of entitlement that allowed it to ignore the realities around it and carry on as if success was inevitable. The captain fell asleep at the wheel and everyone else carried on seeking comfort and delight, dancing, and polishing doorknobs. They ignored the power of mother nature; and the rest is history.